The difference between financial guidance and advice

Knowing the difference between financial guidance and advice can help you make the most of your pension fund.

If you are approaching retirement you have access to free and impartial guidance thanks to the Guidance Guarantee which was introduced by the government in 2015. You can receive this guidance via Pension Wise, Money Helper or at the Citizens Advice Bureau.

However, the guidance you receive via these is not the same as professional, regulated advice. Here’s why…

What is guidance?

• Guidance is an overview of the available options on the market, not necessarily options available to you
• Guidance is intended to provide generic information on the range of options, giving you questions to ask a regulated adviser
• Seeking guidance does not offer guarantees on the decisions you then make
• You can receive guidance for free under the Guidance Guarantee

What is professional advice?

• Advice tells you which options are most appropriate for you, not just all of the options available
• Advice is tailored to each individual; It takes into consideration your current situation, the size of your investments, your goals and explains the potential risks and benefits of various options
• Some advisers require a fee to be paid before providing their advice, while some offer non-obligatory advice where a fee is only payable if you take the adviser’s advice
• If you receive wrong advice and lose money you can talk to the Financial Ombudsman Service or Financial Services Compensation Scheme for reimbursement, providing the adviser is regulated by the Financial Conduct Authority (FCA)
• The Financial Conduct Authority has a database of regulated advisers to help you find the best advice
• Research shows that people who take advice about their pension could amass up to £30,991 on average more pension wealth than those who do not take advice¹

Guidance vs Advice

Guidance is particularly useful for people who need an introduction to the various pension options.
Advice will help you choose the most appropriate option to your unique circumstances, needs and goals.

Article updated: 13/12/2023

¹ What it’s worth, published by ILC UK (November 2019)

Taking pension money early is not right for everyone as it will leave you worse off in retirement. Also, tax treatment depends on your circumstances and is subject to change. That’s why it makes sense to get help from a regulated specialist.